Market, income and cost approaches; desktop versus inspected valuations; and the factors — age, specification, survey status and the freight cycle — that move a vessel's price.
A ship's value is not fixed: it moves with freight markets, newbuilding prices and the cost of money. Lenders, insurers, buyers, sellers and auditors all need a reliable figure, and each uses it differently.
Three valuation approaches
Market (comparable sales) approach
The most common method. The valuer looks at recent sales of similar ships — size, age, yard and specification — and adjusts for the differences. In liquid segments such as dry bulk and tankers, recent "last done" sales give a strong reference.
Income approach
The value of the cash flows the ship is expected to earn over its remaining life, discounted to today, less operating costs and including a residual value. It is useful when a ship is employed on a long charter or when comparable sales are scarce.
Cost approach
The cost of building a replacement today, adjusted for age and depreciation. It is mainly a cross-check for young or specialised ships.
Desktop or inspected?
A desktop valuation assumes the ship is in good condition and is based on its particulars and market evidence. An inspected valuation adds a physical inspection and a review of class records, which matters when condition is uncertain or when a lender or court needs greater assurance.
What moves the value
- Age and remaining economic life — and, at the end of life, the demolition value based on the ship's lightweight tonnage.
- Size and specification — deadweight, cargo gear, fuel efficiency and installed equipment such as ballast water treatment systems.
- Builder and maintenance record.
- Survey status — a special survey falling due soon means a significant cost for the next owner.
- Charter status — a valuation can be "charter-free" or take an existing charter into account.
- The market cycle — freight rates, newbuilding prices and the order book.
Who uses valuations
Banks use them to test loan-to-value covenants; insurers to set agreed hull values; buyers and sellers to price a deal; companies for accounting and impairment tests; and parties in disputes as expert evidence.
Our independent valuations combine market data with technical assessment. Request a valuation.